EUROPEAN EQUITY OPEN: Stocks higher after the open, but on course for a second week of losses; US jobs data ahead

OVERNIGHT: Stocks on Wall Street were lower amid more tensions in the regional banking sectors, along with data which showed higher Labor Costs in Q1, while the ECB's policy outcome was on the hawkish side. Our US wrap is here. APAC stocks traded mixed after the weak lead from the US where risk sentiment was subdued by banking-related headwinds and amid holiday-thinned conditions in Asia due to closures in Japan and South Korea. ASX 200 was choppy amid indecision in the top-weighted financial industry after ANZ Bank’s earnings showed H1 cash profits rinsing to a record, though it warned of increased difficulties in H2, while the RBA’s quarterly Statement on Monetary Policy stuck to the hawkish script. Hang Seng and Shanghai Comp. diverged with the Hong Kong benchmark led higher by strength in tech and property stocks, while the mainland is pressured after Chinese Caixin Services and Composite PMI data which showed the pace of China’s services activity slowed by more than expected but remained at a firm expansion. Our APAC wrap is here.

EUROPEAN OPEN: European equities start the last trading day of the week with gains, though the broad Stoxx 600 and narrower Euro Stoxx 50 are both on course for a second week of losses. Apple (AAPL) is supporting tech names after it released earnings on Thursday which showed iPhone sales above forecasts, shrugging off the global slump in smartphone demand and concerns about the economy. There has also been a lot of updates in the European corporate space: Adidas (ADS GY) and Moncler (MONC IM) both reported numbers above expectations; Software AG (SOW GY) said Silver Lake upped its offer, while the Bain bid was conditional and unachievable; Air France KLM (AF FP) and IAG (IAG LN) gave constructive updates for travel names. As always, we recap on the main equity stories below. This morning, data out of Germany showed industrial orders slipping -10.7% M/M in March (exp. -2.2%, prev. 4.5%), which sparked an immediate uptick in Bund futures; French Industrial Output slipped -1.1% M/M (exp. -0.3%, prev. 1.4%). Ahead, the US jobs data is the key release today, which we preview in our day ahead, below.

STOCK SPECIFICS: In Tech: Software AG (SOW GY) said Silver Lake raised its offer for the company to EUR 32/shr, Bloomberg reported; it added that media speculation about Bain Capital's offer at EUR 34/shr was a non-binding offer subject to specific conditions that were not achievable. Darktrace plc (DARK) appoints tech industry vet Elaine Bucknor to the Board, who was most recently at Sky. In Industrials: Air France-KLM (AF FP) sales top expectations, supported by strong summer bookings, while IAG (IAG LN) lifted its outlook based on the travel rebound. Airbus (AIR FP) unveils a new "stretched" A220-500 Aircraft, could save 20-30% fuel vs current jets. Capita (CPI LN) identified that some pensions data was likely to have been exfiltrated by the cyber attack disclosed in March. Thales (HO FP) sales rise, reaffirms targets. In Consumer sectors: Adidas (ADS GY) shrugged off the Yeezy crisis to top sales expectations in the quarter, though sales still dipped annually. Moncler (MONC IM) sales rose 23% in Q1, topping expectations, supported by China demand and EMEA growth. IHG (IHG LN) saw Q1 RevPAR +33% vs 2022 levels, and said its CEO will step down and be succeeded by its Americas chief. Just Eat Takeaway (JET LN), Delivery Hero (DHER GY), Deliveroo (ROO LN) will note a solid earnings report from US peer DoorDash (DASH), which rose 4.7% in US afterhours trading. In Autos: BMW (BMW GY) recalls 90,000 cars due to defective Takata airbags, warns owners to not drive until replaced. In Financials: Spanish bank CaixaBank (CABK SM) topped net profit forecasts on higher lending income. In Healthcare: Novo Nordisk (NOVOB DC) CFO plans a more gradual launch of Wegovy outside of the US, where the supply crunch is causing a slower international rollout. Our full European equity briefings for May 5th can be accessed here and here.

DAY AHEAD:

• Our interactive Day Ahead calendar is here; a pdf version can be accessed here.


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  EUROPEAN DATA/SPEAKERS: Eurozone retail sales are expected to slip again in March. The ECB’s Bulletin and Survey of Professional Forecasters will likely get attention, but will unlikely contain any new information given yesterday’s ECB rate decision (recap here). On the speaker's docket, ECB's Elderson will give remarks at an EUI event. On the ratings docket, Fitch will potentially review Switzerland (currently AAA), Moody's may review Norway (Aaa).


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  US DATA/SPEAKERS: The main event is the April jobs data, which is expected to show a cooling in the rate of jobs growth; we include some of our thoughts, and a link to our preview, below. The Canadians will release their jobs data at the same time, and it is expected to also show a cooling in the rate of employment, while its jobless rate is expected to tick up. After the Fed rate decision this week, Fed's Bullard (non-Voter, Hawk) and Fed’s Cook (Voter, Neutral) will deliver some remarks; our recap of the Fed meeting can be accessed here. On the data front, the March consumer credit stats will be released in the afternoon. On the energy front, Baker Hughes will release its weekly rig count data.


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  PREVIEW – US JOBS REPORT (13:30BST/08:30EDT): Headline NFP is expected to rise by 180k in April, cooling from the prior 236k while the unemployment rate is seen ticking up slightly to 3.6% from 3.5%. The wages will be eyed to gauge inflationary pressures, and M/M wages are expected to maintain a pace of 0.3% while the Y/Y is seen rising 4.2%, the same pace in March. Labour market proxies have been mixed: initial jobless claims rose in the week that coincides with the BLS survey period, while continued claims moved lower; the ADP added jobs well above expectations, but wages were cool; ISM Manufacturing employment gauge returned to expansionary territory, and the Services employment remained in expansionary territory, but it did slow from March. The jobs report will be used to gauge the Fed's next move, whether that be a pause, or lead to some "additional policy firming", but it is worth stressing there is plenty of data between now and the June 14th FOMC, while the expected and actual tightening of credit conditions will also be key, particularly after First Republic (FRC) saga and more recently, PacWest (PACW) exploring options. Our full preview can be accessed here.

05 May 2023 - 08:10- Research Sheet- Source: Newsquawk